R.I. Blues Settles Class Action Suits Over Drug Discounts for $17.5 Million

By | July 18, 2005

Rhode Island’s largest health insurer, Blue Cross & Blue Shield of Rhode Island, has agreed to pay $17.5 million to settle two class-action lawsuits affecting thousands of customers.

Under the settlement, Blue Cross payments ranging from $10 to $1,400 will be distributed by summer’s end to 116,200 current and former Blue Cross subscribers, said Wood Foster Jr., a plaintiffs’ lawyer. Legal fees taken out of the settlement total $5.7 million.

The agreement ends legal battles that began nine years ago. Plaintiffs had accused Blue Cross of cheating subscribers by not passing along discounts negotiated for prescription drugs and health services.

Blue Cross admits no wrongdoing in the settlements, approved last week by a state judge and a federal judge. Blue Cross attorney Steven Snow said the company settled because it faced at least one lengthy trial and appeal.

“This is a very good deal for members of the class, because not only is Blue Cross denying wrongdoing, we believe there is a substantial probability that Blue Cross would have prevailed” in a trial, Snow said.

The case was launched after Margie and Paul Caranci, of North Providence, went to a lawyer in 1995 with complaints about their Blue Cross claims. The state and federal lawsuits were filed in 1996 and consolidated in 2003.

The complaints alleged Blue Cross secretly negotiated discounts for drugs and services but billed patients for co-payments based on undiscounted prices. The state lawsuit included three other claims, such as an allegation that people covered by “Classic Blue” were billed at higher rates applied to nonparticipating doctors even when they went to participating doctors.

Blue Cross agreed to the settlement in January. U.S. District Judge William Smith and state Superior Court Judge Michael Silverstein then approved the deal.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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